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07 March 2018

The controversy about The Rooms' recent request for proposals is not about Muskrat Falls.

Maybe someone at The Rooms or within the provincial government thought that was the problem when Des Sullivan raised concerns about it. After all, Des is well known as a critic of Muskrat Falls. That might explain why Dean Brinton, The Rooms' chief executive, issued a very short statement that apologized for using Muskrat Falls as an example when explaining the Crown corporation's policy about conflict of interest for advertising agencies responding to the proposal request.

Let us assume that Brinton made a really superficial mistake because otherwise his response is insulting and condescending. Any reasonable personal understood our ought to have understood that Sullivan was concerned about the implication that critics of the provincial government could not bid on government work.

20 February 2018

Two decades ago, there was talk of a deal to develop not one, not two, but three dams in Labrador.

The story broke in a Quebec newspaper, Le soleil, on February 19 and the next day the Telegram did a front pager written by business editor Chris Flanagan.

"The big bonus for Newfoundland from a deal to develop the Lower Churchill is
not simply cheaper electricity and a transmission line from Quebec," Flanagan wrote, "but an
opportunity to send natural gas-generated power the other way, says a Quebec
journalist with high level sources in both provinces."

"The Newfoundland government has done studies examining the potential of
bringing ashore natural gas from Hibernia and other sites on the Grand Banks,
using it to produce electricity and selling it on the North American grid, said
Michel Vastel, a veteran political correspondent and business writer with the
Quebec newspaper, Le Soleil."

Vastel told The Telegram his sources were in both provinces and that the provincial government in Newfoundland and Labrador had studies supporting development of offshore natural gas.

"In his 'briefings,' from high-level sources, Vastel said reports have
estimated Newfoundland's average rate will increase 30 per cent over the next
20 years -- an increase that won't happen if the Lower Churchill goes ahead."

The idea had its critics. "Stan Marshall, the president and CEO of Fortis Inc., which owns Newfoundland
Power, has said a transmission line to St. John's makes no economic sense.

Here are some key details of the deal that never was:

"...Newfoundland will receive approximately 800 megawatts,
Labrador 200 and Quebec 2,100 from the Lower Churchill. Construction of the
project will create 12,000 person-years of employment and power is expected to
be on the grid by 2007."

"The Lower Churchill hydroelectric project consists of Gull Island, with a
generating capacity of 2,264 megawatts, Muskrat Falls, at 824 megawatts and
Upper Lobstick, at 160 megawatts for a total of 3,238 megawatts. The cost of
the project, including transmission lines, is estimated at $12 billion."

In the talks actually announced in early March 1998, the two provinces set aside $20 million to study Muskrat Falls and focused instead on expanding Churchill Falls and building Gull Island.

20 years later we got one tiny dam and big transmission line for that.

The Telegram included a cost of the transmission line from Labrador: "According to several news reports, the Churchill-to-St. John's transmission
line -- including an underwater component across the Straits -- would cost
about $2 billion, and is to be financed by Ottawa."

"The federal government's major benefit would come from reduction in greenhouse
gas emissions that will go a long way to helping Canada reach emission targets
established at the 1997 Convention on Climate Change in Kyoto, Japan."

03 January 2018

The week before Christmas, I dropped by The Rooms for a quick check of some government documents in the provincial archive.

The last time I'd been there, a major public display covered the Newfoundland experience in the First World War. The provincial government is, at least on paper, still in the midst of its official celebration and commemoration of events a century ago. In practice though, the official celebration ended in the middle of 2016 and the Centennial of Beaumont Hamel. With the exception of a small, sparsely attended symposium at Memorial University, events to mark one of the most significant periods in Newfoundland and Labrador history are now over. What was so striking about The Rooms is the complete absence of any Great War commemorations beyond the travelling exhibit from the mainland about Vimy Ridge.

This fits with an emphasis on celebrating the slaughter in 1916 and that is all most people know of the Great War and Newfoundland. It drives home the more troubling aspect of this historical blindness since the war had a far greater impact on Newfoundland in 1917 and 1918 than it had had in a single day on the Somme. The story is far more relevent today than Beaumont Hamel ever could be.

In April, 1917 the Newfoundland Regiment fought at Monchy-le-Preux with as dramatic a result as the one of Beaumont Hamel the year before. This battle as well as others through the spring and summer put a further strain on manpower, already severely tested in 1916. The result would be a conscription crisis that lasted almost a year and that was marked by both rural/urban and Protestant versus Roman Catholic divisions. Recruiting had been consistently most successful in St. John's, while in rural areas proportionately fewer men volunteered.

One popular view held that the burden of the war had been born predominantly by Protestants from St. John's while those from the bays, particularly Roman Catholics, had shirked their national responsibility. Regardless of whether such views were right or wrong, they revealed the deep divisions within the country and a lack of understanding of one part for another that has echoes in the current day's debate about resettlement.

The recruiting problems mixed together with allegations of profiteering by Water Street merchants and an increasingly boisterous opposition to greet Prime Minister Edward Morris on his return from Imperial War Cabinet meeting in the spring of 1917. There should have been an election that fall but Morris had already decided to introduce legislation in the House to postpone the election for a year due to the wartime contingency. He tried and eventually succeeded in forming a coalition government with the opposition Liberal and Unionist parties.

With Morris nominally serving as Prime Minister, opposition Leader W.F. Lloyd took on the role of deputy prime minister. In a secret agreement with Lloyd and union leader William Coaker, Morris agreed to resign by the end of the year with Lloyd as his replacement. In addition, the new administration created a Department of Militia to take over the administration of the war effort from the volunteer National Patriotic Association. In the event, the new department was no more successful than the NPA had been recruiting but at least some of the stink of corruption that attach to the NPA with allegations of wartime profiteering had gone.

On the Sunday nearest July 1, the country marked the first anniversary of the tragic day in 1916. This was one of the first four commemorations established throughout the Empire. As such, the event was worthy of commemoration in its own right and yet the day passed in 2017 without any mention in the official Centennial commemorations.

No sooner had Morris announced a coalition, that he boarded a steamer and returned to England. He resigned in December 1917 and was created Baron Morris of Waterford early in 1918. Lloyd's coalition served through to the end of the war in the Paris peace talks in 1919 before he was replaced by Richard Squires. Morris was last of the long serving prime ministers of Newfoundland. His successors lasted short periods, some only a matter of a few days, in a fluid political climate of shifting coalitions and alliances.

Richard Squires only stands out because of the allegations of corruption in his first administration and because of his return to office in a second administration shortly before the collapse of responsible government. Through the entire period of the 1920s, the government struggled with mounting debt and difficulty in meeting its financial obligations while the politicians fought among themselves.

02 January 2018

Since December 2015, Dwight Ball has been talking about the federal government as the source of cash he wants to tap into.

Specifically he has been talking a lot about how Newfoundland and Labrador is being screwed because it cannot collect Equalization. Ball's whining about Equalization is part of his strategy to avoid making any real changes to the strategic trajectory set by the Conservatives in 2007. Essentially it is about spending as much as you can for as long as you can.

With that in mind, here are three choice quotes from Issues and Answers'year-ender with Premier Dwight Ball.

After Lynn Burry points out that the provincial government pays 83% of the cost of health care, up from the days when the province and federal government split the cost 50/50 the Premier said:

"I agree the Equalization program does not work for Newfoundland and Labrador."

Three things, mostly for Lynn Burry.

1. Health care is entirely within provincial jurisdiction under the constitution. The federal government isn't actually supposed to put *any* money into it.

2. The federal government covered half the cost of everything in Newfoundland and Labrador at one point because the provincial government was so poor it couldn't pay for provincial services on its own. That's why every Premier until Danny Williams came along wanted to get Newfoundland and Labrador off the dole. Williams and every Premier since him, including the current one, has been trying to get back on it.

3. Federal health care funding never came from Equalization. It has always come under a separate funding arrangement. At one point they called it the Canada Health Transfer and it went along with social services funding in the Canada Social Transfer. Now the federal funding is combined under one thing called the Canada Health and Social Transfer.

"What is it about Newfoundland and Labrador that you can define us as a 'have' province?"

The answer is simple and, in some ways it is astonishing that over the past 15 years provincial politicians can get away with talking utter nonsense about a really simple thing like Equalization. Politicians from all parties trot out this foolishness and reporters just lap it up or, in Lynn Burry's case, fuel the idiocy with questions that are just set up with the same stuff.

Equalization takes money from the federal government's general revenue and gives it to provincial governments that don't make enough money on their own to come up to a common, national income standard. The governments use that money to deliver services that are entirely provincial under the constitution. That means the provinces are supposed to make enough money on their own to cover those costs.

The transfer of federal cash is based on the recognition that all provinces are not equal in their ability to raise cash, so the federal government steps in to give some a hand. That way Canadians are not short-changed if - and here's the kicker - the provincial government spends its money appropriately.

Four provinces make more than the standard income. They are known colloquially as "have" provinces: British Columbia, Saskatchewan, Alberta, and Newfoundland and Labrador.

"Have not" means you don't bring in enough cash on your own to make ends meet and so you get a hand-out.

If Dwight Ball really speaks to the Premier of Nova Scotia and moans that this province does not get Equalization, he's lucky Stephen McNeil doesn't punch him in the bake and then kick him in the goolies just for good measure. Like most Premiers, McNeil would give some part of his anatomy to be raking in as much cash as Dwight Ball does every year.

Newfoundland and Labrador *is* a have province by any measure. It takes in more money per person than any government in the country save Alberta. The problem is that successive provincial governments have spent even more than that again. There's no good reason for the overspending. That's why the government is in the hole all the time."...Equalization is not the answer to our revenue or deficit problem."

Huh?

If it is not the answer to our problem, why complain about not getting any of it?

25 December 2017

11 December 2017

Now that Muskrat Falls is officially a boondoggle, all sorts of people are rushing forward to criticise it.

Others are also rushing forward to ensure we all know that they were on the side of the angels back in the day and so, as Brian Jones pleads this weekend in the Telegram, we shouldn’t “blame the media for Muskrat Falls.”

For the past year and a half, Brian tells us, people whom he calls “trolls” have been writing and calling him to ask why the local media did not reveal all the details about Muskrat Falls as the thing was unfolding.

“I always point out a basic fact,” Brian says, that “ the Newfoundland media, not just The Telegram, have covered every aspect of Muskrat Falls since at least 2010.”

06 December 2017

Right off the start, let's affirm that Nalcor was created by an administration that was, from the time it took office, notorious for its efforts to flout the law in order to keep information secret.

Polling information was the first sign of the problem bit wasn't the last example. There was a demand for $10,000 for copies of speeches delivered in public by the Premier to what ultimately became a complete re-write of the law in 2012 to make legal what the government had already been doing to keep all sorts of secrets.

It's easy, therefore, to believe that the Energy Corporation Act, passed in 2007, follows the same pattern. In many respects, you'd be right. For example, we do not know why the government created the energy corporation in the first place. In second reading on the bill, then energy minister Kathy Dunderdale famously spoke only 101 words in her speech introducing it. Not a word of her comments then or later ever explained why the government was setting up Nalcor, what it was supposed to accomplish and how it would be organised.

The sections of the Energy Corporation Act that everyone is now upset about came along in early 2008. They were introduced, as the story went at the time, to address concerns from the major oil companies who would be part of a deal announced later that year to develop Hebron.

The issue for this post, though, is about the chronic misrepresentation of what those sections say whenever people talk about the current controversy over embedded contractors. Here's the way James McLeod summarised the issue from a decision - not yet public - from the province's privacy commissioner:

The Energy Corporation Act, which is the law which creates
Nalcor and gives it all its powers and mandate, says the company should
withhold information “relating to the business affairs or activities” of any
other company that Nalcor works with.

The OIPC [Office of the Information and Privacy Commissioner] ruled that billing rates of contractors would
clearly apply, and that because broader information previously released by
Nalcor could be used to calculate roughly how much individual contractors bill,
individual company names tied to specific contractors should also be kept
secret.

Section 5.4 of the Energy Corporation Act Act says that the chief executive office may withhold commercially sensitive information belonging to Nalcor and its subsidiaries and shall refuse to disclose commercially sensitive information for a third party.

But you can't stop there because the section adds an important bit of information next:

where the chief executive officer of the corporation or the
subsidiary to which the requested information relates, taking into account
sound and fair business practises, reasonably believes...

falls into either of the two categories the section then describes, complete with characteristics.

In other words, there isn't mandatory, automatic, and broad secrecy for something that is vague. The Act places the decision at the discretion of the chief executive officer AND gives that person some guidance as to what "commercially sensitive information" means.

In the embedded contractors case, Nalcor boss Stan Marshall determined what would go out the door and what wouldn't, based on whatever advice he got from lawyers. No one has apparently asked Stan to explain his reasoning and, for sure, no one at Nalcor these days is likely to volunteer a simple piece of factual information. These folks, after all, still release pdfs of documents that are designed to frustrate copying and pasting for data analysis.

We can make a reasonable assumption, though, that because some of the contractors - maybe the one-man shops - consider the information to be commercially sensitive for them, Nalcor won't release it. That's a legitimate protection of third parties. Nalcor just needs to explain that.

As for the privacy commissioner, it's doubtful he buggered up the plain English of all this. And from McLeod's story, it appears that the commissioner has picked up on the idea that two partial disclosures could lead to the disclosure Marshall decided against. That's legitimate as well.

But before we think about changing this section of the Act, everyone needs to get their facts straight, stop, and think hard.

Bad public policy usually comes from a lack of consideration. That includes times when there hasn't been adequate debate in the House but it also comes, as in the recent Muskrat Falls inquiry, when the government makes a hasty decision based on something on Twitter or open line that itself was driven by a few noisy voices with a raft of agendas, interests, and knowledge. That doesn't mean we should not have an inquiry but it does mean government folks should have made a decision based on facts, information, and knowledge.

In the case of the MF inquiry, three of the terms are actually already known and one of them - the PUB exemption - actually dates from 1998. It looks for all the world like the folks who drew up the terms of reference didn't know the facts themselves or what they were really trying to find out. They also left out crucial time periods (anything before 2012) and crucial actors (all the politicians) in the debacle. The PUB bit is actually just a sideshow. The result will be a long, costly, and ultimately inconclusive commission that will miss most of the details needed to avoid a similar debacle in the future. That's the opposite of what the government promised when it announced the terms of reference and the commissioner.

Words matter. Disclosure is important. Facts are crucial.

And in the embedded contractors story, that last element is in short supply. We could all make lots of mistakes as a result, just as we made lots of them in the past - like in Muskrat Falls - by ignoring facts that were, as in the Energy Corporation Act, in plain sight all along.

21 November 2017

In announcing
an inquiry into some aspects of Muskrat Falls on Monday, the Premier
muddled up some numbers that suggest the confusion at the heart of Monday’s big
news. He said that the inquiry will explain how a project that was
originally supposed to cost $5.0 billion at the wound up costing $13 billion or
more.

Then he announced the terms of
reference for an inquiry that focused on the pro forma exercise
called “sanction” that happened when the project was supposed to cost $6.2
billion. The $5.0 billion figure is from November 2010. That’s when
many of the crucial decisions took place but, as far as the terms of reference
go, its outside the bounds of the inquiry.

Justice Richard LeBlanc also won’t look at the political
decisions behind the project, the relationship between Nalcor and the Premier’s
Office, the governance of the corporation, or any of the other major elements
of what became Muskrat Falls. All of those aspects would explain the political
foundation of the project the Premier mentioned in his news conference but none
of them are covered by the inquiry terms. Instead, the inquiry will focus
on the internal management decisions at Nalcor after 2012.

The specific subjects of the inquiry are listed in Section
4, which contains four sub-sections labeled a through d. Let’s run through each
of them.

Energy Demand and Sanction

Section 4 (a) directs the commissioner to inquire into “the
consideration by Nalcor of options to address the electricity needs of
Newfoundland and Labrador’s Island interconnected system customers that
informed Nalcor’s decision to recommend that the government sanction the
Muskrat Falls Project.

One supporter of the project famously said there were
“multiple, interlocking business cases” for it. What Nalcor, the
government and its supporters actually offered multiple, interchangeable
rationalizations.

In November
2010, the key argument for the project was breaking the stranglehold
Quebec supposedly held on electricity development in Labrador. The
project would ship power to markets through Nova Scotia. The mention of
Muskrat as the least-cost source of electricity for the island is found in
paragraph nine of what is essentially a 10-paragraph news release plus a list
of highlights.

Right off the bat, Nalcor didn’t present the alternatives at
the time of project sanction, which is the starting point for the
inquiry. That happened in 2010, although it didn’t really because there
is no evidence Nalcor ever examined alternatives to Muskrat Falls. The only
mention of alternatives has been to the isolated island scenario, which means
Nalcor never evaluated all options anyway.

In 2006 Nalcor did evaluate alternatives to the whole Lower
Churchill project but that was for a different concept: the LCP was
supposed to be about power for export only, with local needs as a secondary
consideration. That’s an important detail because another key aspect of
the 2010 announcement was that this was the original LCP, but with the tiny dam
built first.

There’s also no order in council in which the provincial
government approved a proposal from Nalcor. There’s only OC2012-130 that
lets Nalcor use Crown land:

Under the authority of section 7(2)(a) of the Lands
Act, the Lieutenant Governor in Council is pleased to authorize the Minister of
Environment and Conservation to issue a licence to occupy Crown land to Nalcor
Energy for an area not to exceed 4.3 hectares within the fifteen metre
shoreline reservation at Muskrat Falls, Newfoundland and Labrador, for the
purpose of hydroelectric generation, subject to the terms and conditions
normally applicable to the issuance of such licences.

It’s dated December 4, 2012, well before the infamous
filibuster and the actual formal ceremony announcing “sanction.”

This section will also not touch on the decision to double
electricity rates and the rationale for paying for the project, all of which
was political and all of which was decided in 2010.

Key Points to Retain:

Without an amendment, the inquiry can’t
look at decisions taken prior to December 2012 since the terms specifically
identify Nalcor’s proposal for sanction as the focus. That happened in December
2012.

here’s no indication Nalcor presented any project
justifications in 2012.

There’s also no order-in-council in which cabinet
“sanctioned” Muskrat Falls. It isn’t clear, therefore, what the
commissioner will be doing to meet the first term of the inquiry.

The inquiry won’t look at the political decision to force
domestic users to pay 100% of the cost plus profit (doubling rates), which was
taken in 2010, not 2012.

Cost over-runs

Section 4 (b) is about “why there are significant
differences between the estimated costs of the Muskrat Falls Project at the
time of sanction and the costs by Nalcor during project execution, to the time
of the inquiry.”

Key Points to Retain

This will be the guts of the
inquiry.

It will be technical.

None of it is political.

Hello, 1998

Section 4 (c) is about “whether the determination that
the Muskrat Falls Project should be exempt from oversight by the Board of
Commissioners of Public Utilities was justified and reasonable and what was the
effect of this exemption, if any, on the development, costs and operation of
the Muskrat Falls Project.”

This one is weird, as if the person who wrote the term had
no idea what end was up. The decision to exempt the LCP from the public
utilities board was taken in 1998 because the project was entirely for
export. The PUB was entirely about domestic rates. In the original
scheme there’d have been almost no cost to pass on to consumers.

In 2010, cabinet did not have to decide anything about
exemption since it was done long before it took office.

So given the amount of time the Premier spent blaming the
former Conservative government for the mess he and his colleagues have cleaned
up (not really – ed.), giving the inquiry the power to call Brian Tobin
to the stand is just nutty.

Key Point to Recall

The exemption order
predates the Conservatives return to power in 2003.

Oversight Committee Mania

Section 4 (d) is about “whether the government was fully
informed and was made aware of any risks or problems anticipated with the
Muskrat Falls Project, so that the government had sufficient and accurate
information upon which to appropriately decide to sanction the project and
whether the government employed appropriate measures to oversee the project
particularly as it relates to the matters set out in paragraphs (a) to (c),
focusing on governance arrangements and decision-making processes associated with
the project.”

The adequacy of governance structures is a political
question - or one about internal government operations - but this term is
written to focus on what Nalcor told people in government at the time of
sanction in 2012. In effect the wording precludes any discussion of the
long-standing relationships involved in decision-making by and about Nalcor and
focuses on whether or not Nalcor told government enough.

Since it doesn’t look like the key decision for government
was in 2012, this one might wind up being a lot more fun than
informative. A clever lawyer – like Jerome! - should have a field
day with this bit. As well, since the term is written to focus on what Nalcor
did, the fact the government made a certain decision gives the politicians
an automatic excuse, if they want to take it.

That’s really part of the problem with the whole inquiry
terms of reference. It is structured on the assumption Nalcor brought
this forward in the same way it pursued Cat Arm or one of the other projects.
Nothing could be further from the truth. This one has been primarily
about politics since 2003 and arguably as far back as 1998.

With a faulty
set of assumptions underpinning it, this circumscribed inquiry can’t possibly find any
meaningful answers to how we got into this mess in the first place.

That last sentence is the big take-away.

-srbp-

SRBP has followed the Lower Churchill project more closely
than anyone outside government. There are both short posts and detailed
ones covering the entire thing since 2003 up to 2017. There’s a tab at
the top linking to some of the posts and others are easily accessible by using
the search function.

Feel free to use it and if you want to pose a question on
something you may have missed you can find me @edhollett on Twitter or at
ed_hollett@hotmail.com

20 November 2017

Two different interpretations of federal NDP leader Jagmeet Sing's position on Muskrat Falls.

In Sarah Smellie's online story, Singh had a few concerns and is "not comfortable" with the project.

But he didn't outright condemn the project.

"Right now I'm concerned … I'm concerned about those two pieces and I want to make sure that those are addressed. I'm not comfortable with a project that doesn't have those things addressed."

Yet, in the story that went to air, the provincial NDP were opposed to the project, as provincial leader Lorraine Michael had always been according to the voice-over.

New Democrats bobbed their heads up and down approvingly because that is the story they want us to believe. It is the story they fervently believe in their own hearts: Lorraine Michael and the NDP have always opposed Muskrat Falls.

02 November 2017

According to the Royal Canadian Legion's Poppy Manual, the Legion will never authorize the display of a poppy on "blogs or discussion groups even of a remembrance nature, as the Legion cannot control the text content of such forums [sic]."

A symbol of the defence of freedom can't be displayed in Canada on a website where Canadians exercise their freedom of speech.

08 September 2017

Arguably, Justice Gillian Butler’s decision in a six year old case on the special ballot provisions of the provincial election law is one of the most significant political events in recent years.

Butler ruled the special ballot rules are unconstitutional since they deny an individual’s right to vote under the Charter of Rights and Freedoms. Introduced in 2007 with unanimous support of all members of the House of Assembly, the special ballot rules allow people to vote at least four weeks before an election exists.

Among the first critics of the special ballot rules was Mark Watton. He represented the Canadian Civil Liberties Association pro bono as an intervener in the case Butler heard. In 2007, though, Watton wrote a letter to the editor of the Western Star and later published it on his now-defunct blog nottawa. SRBP reproduced it from the print edition.

The fight against the special ballot laws took four years to get to a court and another six for the case to end in a decision but the fight was worth it.

Most people likely haven’t read Watton’s letter and the fact it isn’t available online anymore means that people writing about the issue these days won't know any of the background to the story. To remedy that and to give Watton his due, here’s the letter in its entirety.

The provincial government might appeal the decision. Hopefully it won’t since, as Watton explained a decade ago, the law is unconstitutional. There is no reason to disagree with Butler’s conclusion. The only sensible task for justice minister Andrew Parsons and his colleagues is to introduce amendments to the especial ballot law in the fall sitting of the House.

[Originally published in the Western Star and at nottawa, Friday 14 September 2007]

28 August 2017

People who study words and language call it a borrowed word, meaning that we use it in English but got it from the French word. In this case, it is the French word for revenge.

People familiar with history are most likely to associate the word revanchism with the struggle between France and Germany that lasted from 1870 until 1945. The Prussians defeated the French in 1870 and took two territories – Alsace and Lorraine – that many in France wanted back.

Desire for revenge for regain of the lost territories was an important aspect of French policy against Germany at Versailles in 1919. The tension between the two countries lasted until, after another world war, Germany was simply destroyed as a single country and France got the territories back.